It is always important for us within the aviation industry to understand what’s going on in the equity markets as well as the overall economy. The Trends Research Institute through their Trends Journal is a world leader in forecasting. Therefore we are pleased to provide this weekly market and economic update to our readers.
Remember the big news that the U.S. Labor Department claimed over 500,000 jobs were created in January, which we reported was merely a government analysis estimate and the number was contrary to the declining economic fundamentals. Among them is the fact that some 35,000 temporary employees were fired during the height of the Christmas shopping season.
Making a bad situation worse, retail sales—in a nation of which some 70 percent of its Gross Domestic Product is from consumer spending—were down 1.1 percent in December… registering the biggest monthly decline of the year as consumers cut back at the height of the holiday season.
It is clear and simple, but again, it is disguised and lied about by the mainstream media and the U.S. government crime syndicate headed and controlled by the Federal Reserve Bankster bandits. America and much of the global economy was artificially propped up with record low interest rates and governments pumping in countless trillions of dollars to fight the COVID War… that destroyed the lives and livelihoods of billions.
As a result of the cheap money pumping flooding into economies, inflation skyrocketed… hitting 40 year highs across the globe. But again, as they have a long track record of lying and cheating, the Bankster bandits claimed inflation was just “temporary” and then just “transitory” so they could keep shoveling out the cheap money to artificially prop up economies and equities.
As for inflation, with interest rates in the zero and negative range it created a housing boom that drove prices up some 40 percent over the past three years… but of course, in the criminal state of America, those housing number inflation rates are not included in the Consumer Price Index.
Besides making the Plantation Workers of Slavelandia content that they were getting paid to stay home and not go to work, the cheap money binge made the Bigs bigger and the rich richer.
Merger and Acquisition deals hit an all-time high in 2021. But as interest rates rose, M&A slumped last year and is in steep decline again this year.
With interest rates going up, as we had forecast, equities and economies will continue to go down.
Today, The Wall Street Journal reported:
Fundraising by venture-capital firms hit a nine-year low in the fourth quarter, as the macroeconomic pressures that already weighed on technology startups began to affect the investors who underpin the industry.
Venture firms raised $20.6 billion in new funds in the fourth quarter. That was a 65% drop from the year-earlier quarter and the lowest fourth-quarter amount since 2013, according to data firm Preqin Ltd., which tracks venture-fund data. The amount was also less than half the level raised in the preceding three months, the first time fundraising volumes decreased from the third to fourth quarter since 2009, the data show.
TREND FORECAST: Yes, the lowest fundraising volume since 2009… the height of the Great Recession!
Yet, WSJ does not mention that. Again, the higher interest rates rise, which The Street is now estimating that the Fed will raise them at least another 75 basis point over the course of the year… the steeper the economy will fall from top to bottom. What we have forecast is now reality on The Street. With the equity markets tanking, this was the headline story on CNBC today:
Walmart and Home Depot are getting ready for a consumer slowdown
- Walmart and Home Depot’s outlooks preview a tougher year for the retail industry.
- The retail giants shared cautious full-year guidance that disappointed some investors. Mall players, such as Macy’s and Nordstrom, may be in an even tougher spot.
Home Depot Chief Financial Officer Richard McPhail said inflation is influencing customers’ decisions.
“We’ve seen an increasing degree of price sensitivity as the year’s gone on, which is actually sort of what we predicted in the face of persistent inflation,” McPhail told CNBC.
Walmart factored challenging dynamics into its full-year forecast, said John David Rainey, the company’s CFO. Those include the Federal Reserve’s interest rate hikes and consumers’ lower savings rates and shakier balance sheets.
“We find ourselves in a similar situation to one that we’ve been in for the last several years where there’s a lot of unknowns,” he said on a call with CNBC.
Regardless of where the economy goes, as we have detailed in The Trends Journal, the billionaires got $27 trillion richer over the past two years while the masses got poorer.
Indeed, in America which was once called “The Land of Opportunity,” the middle class “has decreased considerably,” according to Pew Research. Back in 1970 some 61 percent of adults were middle class and 14 percent were in the upper income range. But as the rich got richer and the rest got poorer, as of 2021, 50 percent are now the middle class and 21 percent are upper income.
In dollars and cents, back in 1970, adults in middle-income households accounted for 62 percent of aggregate income. But now Pew reports that share has slumped to just 42 percent in 2020.
When accounting for the fact that inflation has risen far above wages, income levels have actually fallen lower. In the 12 months through January, in the U.S., private-sector nonfarm workers income rose 4.4 percent while the CPI rose 6.4 percent during the same period. And if you look at the real inflation numbers before they were rigged, according to John Williams’s Shadowstats, the rise in consumer prices in the year through January were up 14.48 percent.
And while the plantation workers of Slavelandia got poorer, upper income household income rose from 29 percent in 1970 to 50 percent in 2020. Again, as the rich get richer, their percentage of income has most likely risen in the past two years.
From Bad to Worse
Putting the facts on the table, as we have forecast, much of the world is on the precipice of the worst financial crisis in modern history.
For example, for some two-and-a-half years ago, The Trends Journal had forecast that as a result of the COVID War that forced people to work from home—and as a result of hi-tech advancements of communication—fewer people would go back to pre-COVID War commuting to work routines. And we warned that there would be an Office Building Bust.
- “Commercial Real Estate Bust? Office Occupancy Rates In Toilet” (29 Mar 2022)
- “Workers Staying Home: Commercial Real Estate Disaster Looming” (19 Oct 2021)
- “Return To Offices Postponed: Commercial Real Estate Bust?” (14 Sep 2021)
- “As Forecast: NYC Commercial Real Estate Crisis Worsens” (24 Aug 2021)
- “Commercial Real Estate Crisis?” (3 Aug 2021)
- “Will Delta Variant Kill Commercial Real Estate?” (3 Aug 2021)
- “Commercial Real Estate: Boom Or Bust?” (25 May 2021)
- “NYC Commercial Real Estate Suffers” (15 Dec 2020)
- “Manhattan’s Commercial Real Crash” (21 Sep 2021)
- “Commercial Landlords Scrambling” (27 April 2021)
- “Work From Home = City Real Estate Down” (20 Oct 2020)
- “Spotlight: Top Trend 2023, Office Building Bust” (17 Jan 2023)
- “As Forecast: Business Office Bust Begins to Bite” (20 Dec 2022)
- “As Forecast: “Dimming Hope” That Pre-Covid Demand For Office Space Will Return, WSJ Says” (22 Nov 2022)
- “Big Tech Dumps Office Space” (22 Nov 2022)
As much as we publicized this fact, and despite the office occupancy rates at a bit above 50 percent today according to Kastle, our forecasts were ignored by the mainstream business media.
To drive home the point that it would become a reality to them this year that they could no longer deny, Office Building Bust which was one of our Top Trends for 2023 is now a top story in The Wall Street Journal:
The number of big office landlords defaulting on their loans is on the rise, fresh evidence that more developers believe that remote and hybrid work habits have permanently impaired the office market.
The giant investment manager Brookfield Asset Management recently defaulted on a total of over $750 million in debt for a pair of 52-story towers in Los Angeles, according to a February securities filing. Real-estate firm RXR is in talks with creditors to restructure debt on 61 Broadway, a 34-story tower in Manhattan’s financial district, according to people familiar with the matter. Handing over the building to the lender is among the options under consideration, these people said.
In another sign of distress, a venture of an investment manager affiliated with Related Cos. and BentallGreenOak is in similar debt-restructuring talks over a $150 million warehouse-to-office conversion project in Long Island City, N.Y., that hasn’t filled up as much space as expected, according to people familiar with the matter.
Five to 10 office towers each month join the list of properties at risk of defaulting because of low occupancy, expiring leases or maturing debt that would have to be refinanced at a higher rate, according to Manus Clancy, senior managing director with data firm Trepp Inc. (WSJ, 21 February 2023)
TREND FORECAST: The size and implications of the Office Building Bust are unparalleled in modern history. Take a trip around the world and take a look at all the “For Rent,” “For Lease” signs plastered across downtowns. And making a bad situation worse, as interest rates rise and economies go down more businesses will go out of business and those who are still in business will be shrinking their office space to save money.
Also unreported are all the new construction that was in play before the COVID War that is now underway of more office buildings that will not be occupied. And as we reported, despite all the talk from politicians to turn these empty buildings into apartments, those built over the past 50 years are not apartment convertible.
YESTERDAY: U.S. STOCK MARKET CLOSED FOR PRESIDENT’S DAY, COMING KEY DATA WILL AFFECT MARKETS
The U.S. Stock Market was closed yesterday to mark the President’s Day holiday as the gamblers, which the media calls “investors” wait for key corporate earnings and the release of the Federal Open Market Committee’s minutes from its meeting earlier this month.
The minutes from the FOMC meeting’s minutes is due on Wednesday and there is growing concern that the Feds will increase interest rates by 50 basis points at the next meeting in March. Besides the meeting’s minutes, the all-important Personal Consumption Expenditures (PCE) price index is also expected to be released on Friday. The data is considered the most closely watched by the central bank.
Traders will also consider the financials from Walmart and Home Depot to gauge the health of the American consumer. The U.S. is anticipating the closures of 800 big box stores across the country, including major retailers like Walmart, Gap, and Party City.
Elsewhere, London’s FTSE was up 9.95, or 0.12 percent, to 8,014.31 and the benchmark STOXX 600 was up 0.34, or 0.07 percent, to 464.64. In China, the Shenzhen Component was up 2.03 percent to close at 11,954.13 and the Shanghai Composite gained 2.06 percent, to close at 3,290.34. Hong Kong’s Hang Seng was up 0.85 percent and South Korea’s Kospi closed slightly higher at 2,453.15. Japan’s Nikkei was also up slightly to 27,531.954.
The European market started the day strong, but earlier gains evaporated as there were more guesses on The Street that the Fed and European Central Bank would keep raising interest rates and as Joe Biden went to Kyiv promising to ramp up the Ukraine War.
Stocks in China benefited from the People’s Bank of China’s decision to leave its 1-year and 5-year prime loan rates unchanged, which is what investors expected.
TRENDPOST: Gerald Celente has warned that the U.S. economy is hanging on by a thread, and the only reason the stock market is still inflated by cheap money is for the Bigs. Americans across the U.S. are hurting, with soaring inflation and energy prices.
The old saying is that the public does not know there is a recession until it has already started. But a recent Morning Consult poll found that about half of Americans think a recession has already begun. Stocks do not reflect that feeling and have risen 7 percent in the year.
OIL: Hopes of China’s reopening sent the oil market higher yesterday, with Brent crude rising 59 cents a barrel, or 0.7 percent, to $83.59 by midday trading and West Texas Intermediate crude for March sales was also up 58 cents, or 0.8 percent, to $76.92.
Reuters noted that analysts are anticipating China to import a record amount of oil in 2023 to meet increased demand. Baden Moore, the head of commodities research at National Australia Bank, told the news outlet that the “rebound in China and global jet demand” continues to drive upside risk to prices.
Goldman Sachs told investors that it expects future oil supply shortages will send prices toward $100 a barrel by late 2023. They wrote that prices will move higher while the “market pivots back to deficit with underinvestment, shale constraints and OPEC discipline ensuring supply does not meet demand.”
TRENDPOST: Oil remains our wildcard as Israel ratchets up war with Iran and the Ukraine War continues to expand. Gerald Celente has famously said: “When all else fails, they take you to war.” And if war breaks out in the Middle East, we forecast oil prices will spike above $130 per barrel which will in turn crash equities and economies across the globe.
GOLD: A stronger U.S. Dollar sent gold prices lower yesterday with spot gold falling 0.2 percent at $1,837.59 per ounce. U.S. gold futures also eased 0.1 percent to $1,847.60. The Trends Journalhas noted that economic turmoil often means higher gold prices. But the precious metal has failed to jump because of the persistently strong greenback and high interest rate. The Federal Reserve has indicated that it will continue to raise rates to try to bring down inflation.
TRENDPOST: The Trends Journal is long on gold because it is the world’s safe-haven asset and the world faces such instability.
BITCOIN: The world’s most popular cryptocurrency saw new gains on Monday and reached above $25,100 while continuing its 2023 momentum. Bitcoin is up about 50 percent higher since the start of the year.
Bitcoin has benefited from volatility in the stock market as traders anticipate future rate hikes from the Federal Reserve to combat inflation.
LAST WEEK: EQUITY MARKETS BALK ON NEW DATA
Inflation maintained an annual rate of 6.4 percent in January, barely changed from December’s 6.5-percent pace, prodding U.S. Federal Reserve officials to warn of more rate hikes ahead.
Inflation’s stubbornness and the Fed’s resolve sent investors toward the sidelines.
The Dow Jones Industrial Average ticked down 0.18 percent for the week. The NASDAQ eked out a 0.6-percent gain over the five-day stretch, leaving the Standard & Poor’s 500 index lower by 0.43 percent.
Two Fed officials said Thursday that they would urge a March interest rate increase of more than a quarter point.
Loretta Mester, president of the Federal Reserve Bank of Cleveland, said there was a “compelling economic case” for a half-point hike at the Fed’s most recent meeting, leading observers to believe she will push hard for a similar rise at the next gathering.
James Bullard, Mester’s counterpart at the St. Louis Fed, told a 16 February press briefing that he wants to boost the central bank’s key rate to 5.375 percent as soon as possible and that he could be persuaded to support a half-point bump at the Fed’s meeting next month.
The current rate is between 4.5 and 4.75 percent.
“We’ll probably have to continue to show inflation-fighting resolve as we go through 2023,” Bullard said.
Markets had recently priced in a rate hike of no more than a quarter point and now must reconsider in the face of stronger-than-expected inflation data.
The yield on the benchmark 10-year treasury sank to 0.3838 percent on Friday from 0.3888 percent on Thursday. Yields fall as prices rise with demand.
Spot gold ended the week down 1.0 percent at $1,842 at 5 p.m. U.S. EST on 17 February.
Brent crude oil’s price dropped 3.0 percent through the week to $83.02 at 5 p.m. U.S. EST on 17 February. The price was weighed down by the world’s general economic malaise and an unexpected increase in Nigeria’s production.
West Texas Intermediate oil, the U.S. price benchmark, sank 3.2 percent to $76.32.
Bitcoin shot up 9.4 percent to $24,093.50 at 5 p.m. U.S. EST on 17 February, thanks to “a bit of a euphoric rally that regulatory issues have cooled off temporarily,” analyst Riyad Carey at data firm Kaiko said in comments quoted by CoinDesk.
Overseas, the London FTSE was up 1.6 percent and Europe’s Stoxx 600 index gained 1.3 percent through the week.
The Japanese Nikkei slipped 37 points, a fraction of a percent. South Korea’s KOSPI gave back 0.5 percent.
In China, the Hong Kong Hang Seng was off 1.0 percent, the mainland’s CSI Composite sank 1.6 percent, and the SSE Composite was off 1.0 percent.
TODAY: DOW DIVES NEARLY 700 POINTS. GAMBLERS SPOOKED BY HIGHER INTEREST RATE FEARS
The Dow Jones Industrial Average was down 697.10, or 2.06 percent, to 33,129.59 as investors considered future moves by the Federal Reserve to tame inflation.
The S&P 500 also shed 81.75, or 2 percent, to 3,997.34, and the Nasdaq Composite fell 294.97, or 2.50 percent, to 11,492.30.
The Dow’s 2023 gains have now evaporated and along with the S&P 500 and Nasdaq, they all had their worst one-day point and percentage slump since 15 December 2022.
Fearing the higher than expected Consumer Price Index report from last week and recent comments from Federal Reserve officials that seem to suggest that interest rates will stay higher and for longer than previously anticipated, the market drag continues.
Loretta Mester and James Bullard, two non-voting members of the Federal Open Market Committee (FOMC), suggested that the March interest-rate hike could be 50 basis points, which would be higher than anticipated, CNBC noted.
Edward Moya, senior market analyst at brokerage OANDA, commented on retail stocks and their earnings, saying the data suggests “it is going to be a tough year ahead and that should keep the pressure on stocks.”
Elsewhere, London’s FTSE was down 36.56, or 0.46 percent, and the STOXX 600 also shed 0.87, or 0.19 percent, to 463.77. Asia was mixed. Japan’s Nikkei was down 58.84, or 0.21 percent, to 27,473.10 and South Korea’s Kospi gained 3.84, or 0.16 percent, to close the day at 2,458.96.
Hong Kong’s Hang Seng was down 357.47, or 1.71 percent, to 20,529.49. China’s Shanghai Composite was up 16.19, or 0.49 percent, to 3,306.52 and the Shenzhen Component was up 14.48, or 0.12 percent, to 11,968.60.
TRENDPOST: It is worth noting that wage growth in the U.S. has slowed to a crawl since mid-2022. The Wall Street Journal reported today that nominal wage growth for private-sector, nonfarm workers increased by 4.4 percent in the 12 months through January. Compare that to the 6.4 percent increase in consumer prices in the year through January. And as we note, when you use the real inflation rate as evidenced in Shadowstats at 14.42 percent, consumers are spending a lot more to buy a lot less.
Andrea Garnero, an economist at the Organization for Economic Cooperation and Development, told the paper that workers have not been demanding higher salaries because of the slowing economic conditions and the threat of layoffs. He said labor unions in Europe seem more concerned now in preventing job losses than increasing salaries.
There is also still a logger jam in Washington about the debt ceiling, which would mean the U.S. could default on its debt. One of the ideas being floated is that the U.S. Treasury deposits a $1 trillion platinum coin in the Federal Reserve and draws on that money to pay off the debt. Janet Yellen, the Treasury secretary, has shot down the idea because she said it compromises the independence of the Fed by “conflating monetary and fiscal policy,” according to the WSJ.
OIL: Brent crude fell 1.2 percent today to close at $83.05 a barrel. West Texas Intermediate was also down 25 cents, or 0.33 percent, to $76.32 a barrel.
It was a choppy day in the oil market that was first fueled by optimism of China’s post-COVID growth.
Traders became more pessimistic in today’s session and expressed concerns that global growth will not be as strong as previously anticipated. Traders said there is a lingering concern about the strength of the U.S. dollar in the world market – which makes oil more expensive internationally – and interest rates continue to drag down the market.
Indeed, the benchmark 10-year Treasury reached heights not seen since November. The 10-year Treasury yield hit 3.9 percent and the 2-year yield hit 4.7 percent. The inversion between the two Treasuries signals market expectations for a coming recession.
The growing feeling on The Street is that the fed funds rate could move higher than 5.25 percent to 5.5 percent rate before easing.
TREND FORECAST: It is worth noting that about a week after Russia’s invasion of Ukraine, oil prices rocketed to $110 per barrel, which marked a 14-year high and in June, Americans were shelling out an average of $5 per gallon.
We have noted that the U.S. is not conducting a proxy war in Ukraine against Russia, it is at war with Russia. And with the Ukraine War heating up following President Biden’s trip to Ukraine, this too may well drive up oil and other commodity prices.
And with the Middle East Meltdown heating up, should military conflict between Israel and Iran erupt, oil prices will break above $130 per barrel… which will crash equities and economies across the globe.
GOLD: The precious metal was trading lower today and was down $7.50 to $1,842.70 an ounce as of 3 p.m. ET. We have long noted that gold prices suffer when matched against a high U.S. Dollar and rising Treasury yields.
The U.S. Dollar is maintaining its strength against other world currencies as tensions around the globe continue to worsen. The Ukraine War marks its one-year anniversary and President Joe Biden visited Kyiv yesterday to promise that the war will continue. He said today that Russia will not win in the country.
TRENDPOST: Gold should be much higher than it is currently trading because of geopolitical instability. And, when economies crash, we forecast that demand for gold, the primary safe-haven asset, will sharply escalate as will its prices… breaking well above $2,000 per ounce.
BITCOIN: The world’s most popular crypto was down $223.20, or 0.90 percent, to $24,586.10 by 2:30 p.m. ET today, falling below the $25,000 mark that investors were looking for.
The Coin Telegraph, citing CryptoQuant, an on-chain analytics platform, reported that there is some concern that more people are not buying coins amid the latest bull market since the beginning of the year and that the crypto could be “weaker” than meets the eye. This is unlike recent bull markets where more people try to get in on the action.
“I am concerned that this 2023 rally did not show any rise in Active Addresses,” one analyst wrote. “The ‘price’ of an asset is determined by the laws of supply and demand in the market. Crypto markets are no exception. For asset prices to rise, market interest and demand must be supported.”
TRENDPOST: The new year started strongly for bitcoin and popular bitcoin Twitter accounts expressed optimism that the coin is holding up its value despite market turmoil and the threat that the U.S. Federal Reserve will continue raising interest rates.
Another concerning trend is that the number of bitcoin “whales,” or accounts that hold over 1,000 coins, hit lows not seen since August 2019 on Sunday, according to Decrypt. These whales own about $25 million in bitcoin. As of 19 February, there were 2,027 whales. The report said the number of whales peaked last year.
However, we maintain our forecast that should bitcoin strongly rise above $25K per coin, it will move much higher.
Note: The views expressed on on-aviation.com are not necessarily those of On Aviation™.